This Model S is referred to as a Beta 1 by Tesla, yet is completely drivable.
Josh Miller/CNET

Tesla Motors today said it has secured supply of battery cells from Panasonic for its Model S electric sedan, a move Tesla says will allow it to meet its cost targets.

Through the supply agreement, Panasonic will make enough lithium ion battery cells for 80,000 electric vehicles over the next four years, according to Tesla.

The Model S will use a line of batteries developed by Panasonic and Tesla specifically for electric vehicles. The collaboration came out of a deal between the two companies in 2009, in which Panasonic supplied battery cells, the components that go into battery packs, for the Tesla Roadster sports car. Panasonic also invested $30 million in Tesla.

The supply deal allows Tesla to know its production costs and margins for the Model S, an all-electric luxury sedan. The company last week unveiled the beta version of the Model S to people who have made reservations to buy one. Tesla says it has 6,000 reservations so far.

The Model S is critical to Tesla's financial future as it is ramping down sales of the Roadster sports car. The company plans to start delivering a high-end edition of the Model S to customers next year and then offer an electric crossover based on the same electric powertrain.

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Martin LaMonica is a senior writer covering green tech and cutting-edge technologies. He joined CNET in 2002 to cover enterprise IT and Web development and was previously executive editor of IT publication InfoWorld.
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